Leon Cooperman said the stock market will be lower a year from now and the Fed will be "surprised" at inflation.- He also said wealthy individuals should pay more in taxes but he disagrees with Sen. Warren's wealth tax plan.
- The billionaire detailed his "modest" taste and said he recently traded in a 2002 Lexus for a Hyundai.
In a 22-minute interview with CNBC on Friday, Leon Cooperman said the stock market will be lower a year from today, defended capitalism, and discussed his ongoing back-and-forth with Sen. Elizabeth Warren over the wealth tax. The investor, whose estimated net worth is $2.5 billion according to Forbes, also discussed his "modest" lifestyle choices.
Here are his 10 best quotes:
(1) On his bearish long-term market outlook:
"Let's face it. The market is facing the fact that taxes are going up, interest rates are going up, and inflation is going up. And we have a reasonably richly appraised market. So cyclically I'm engaged. But I got an eye on the exit," said Cooperman, who also told CNBC the stock market will be lower a year from today.
(2) On inflation that could surprise the Federal Reserve:
"I think that Mr. Powell will be surprised by inflation. It's not going to be as quiescent and transitory as he thinks. I think the Fed will be forced to say something before the end of 2022."
(3) On the "self-correcting" nature of the current market:
"The market has been very self corrective, in the sense that the FAANG stocks are not expensive, but the aspiring FAANG stocks are very expensive, and they've been corrected in a serious way. The whole slowdown in the SPAC area is self-correcting."
(4) On the fixed income market being "overvalued."
"I don't understand why someone would want to buy a bond if you're going to give away 40% to 50% of the coupon to the government and then you have inflation, you're getting your capital confiscated. I'd rather take my chance on a common stock."
(5) On the rapid pace of economic growth:
"If you spoke to a hundred economists today and asked them what their view is of the potential real growth of the US economy, the response would be centered around 2%," Cooperman said. "We're growing this year four to five times potential, yet the Fed is persistent in keeping interest rates at near zero. That doesn't make any great sense to me. It's just pushing people out on the risk curve."
(6) On his on-going back and forth with Sen. Elizabeth Warren:
Cooperman said he thinks that Warren's wealth tax is "probably" unconstitutional. "I don't know her. I don't vote in Massachusetts, but I think she's very wrong-minded," he said.
(7) On the wealth tax:
"I do believe in the progressive income tax structure, I do believe rich people should pay more. The wealth tax makes no sense to me, for lots of reasons. In all the countries it's been introduced, I think 14 out of 17, it's been eliminated. And there are so many better ways of going about what [Warren is] looking to accomplish."
(8) On the success of wealthy individuals:
"How do you get to be very wealthy? You develop a product or service the world wants. Is the world better off or worse off because of Jeff Bezos, Bill Gates, Bernie Marcus, Ken Langone? I think the world is better off."
(9) In defense of capitalism, and mega-cap companies like Microsoft, Google, Amazon, and Facebook:
"I'm a capitalist with a heart. I don't have much use of money. I respect money. I lived very modestly, but I believe that what has made America great is our commitment to capitalism. And the fact that we are turning our back in many respects on capitalism is wrong...God knows what we would be going through if we didn't have those companies in the last few years to help us with this pandemic." Cooperman said.
(10) His view that material possessions bring "aggravation."
"I just bought a new car the other day and the car I traded in was a 2002 Lexus- I kept the car for 20 years! And I bought a Hyundai. I'm not a collector of things."